The foreign investor is permitted to purchase foreign currency and remit overseas the investment capital converted into VND but not fully spent in Viet Nam. — Photo dddn

The State Bank of Viet Nam (SBV)'s Circular 19/2014/TT-NHNN (11 August 2014) guides foreign exchange control of foreign direct investment (FDI) activities in Viet Nam such as contribution of investment capital, opening and use of direct investment capital accounts, remittance overseas of capital, profit and other lawful income and transfer of capital into Viet Nam in the pre-investment phase. The circular applies to residents who are FDI enterprises, non-residents participating in business cooperation contracts (BCC), non-residents who are foreign investors in FDI enterprises, and related organisations and individuals.

 Contribution of investment capital

1. Foreign investors and Vietnamese investors in FDI enterprises are permitted to contribute investment capital in foreign currency or VND as specified in the investment certificate (IC);

2. Residents who are Vietnamese investors in FDI enterprises are permitted to contribute investment capital in foreign currency from their owned sources.

Using direct investment capital accounts

To carry out FDI activities in Viet Nam, the FDI enterprise or BCC foreign investor must open a direct investment capital account in foreign currency or in VND at an authorised bank. This account may be used for revenue and disbursement transactions relating to the FDI activities in Viet Nam.

Remittance overseas of lawful income

1. The foreign investor is permitted to remit overseas direct investment capital once the FDI enterprise is dissolved or terminated, or it reduces investment capital. This also applies when BCC and investment projects are completed, liquidated or terminated. In addition, principal, interest and fees from foreign loans, as well as profits and other lawful income relating to the FDI activities in Viet Nam via this direct investment capital account can also be remitted overseas.

2. If the FDI enterprise closes the direct investment capital account due to dissolution, termination or assignment of its investment capital, resulting in the change of its legal entity, the foreign investor must use his or her foreign currency payment account or VND payment account, opened at the authorised bank, to purchase foreign currency and remit overseas its direct investment capital and other lawful income.

3. The foreign investor is permitted to use lawful income in VND from FDI activities in Viet Nam to purchase foreign currency at the authorised credit institution and remit it overseas within 30 business days after purchase of foreign currency.

Capital transfer in pre-investment phase

1. Prior to issuance of IC:

(1) The foreign investor is permitted to transfer investment capital into Viet Nam to meet lawful expenses of the pre-investment phase in Viet Nam under written agreement between the parties involved and via the foreign investor's foreign currency payment account opened at the authorised bank;

(2) The foreign investor is permitted to use investment capital transferred into Viet Nam as above, to meet lawful expenses in the pre-investment phase in Viet Nam.

2. After issuance of IC:

(1) The foreign investor, Vietnamese investor in the FDI enterprise and BCC foreign investor must finalise the investment capital transferred into Viet Nam prior to issuance of the IC;

(2) Conversion of the foreign investor's capital, transferred into Viet Nam to meet expenses of pre-investment in Viet Nam, into capital contribution or foreign loan capital must be conducted based on a written agreement between the parties involved. If the foreign investor's capital, transferred into Viet Nam and used to meet expenses of pre-investment, is converted into a foreign medium or long-term loan, the FDI enterprise must register the loan;

(3) If the foreign investor does not fully use the investment capital transferred into Viet Nam to meet expenses of pre-investment, the foreign investor is permitted to remit overseas the remaining amount in foreign currency or purchase foreign currency to remit overseas the amount of investment capital converted into VND and not fully spent in Viet Nam. Remittance overseas must be conducted within 30 business days after purchase of foreign currency.

3. Non-issuance of IC or non-continuance of FDI project in Viet Nam:

(1) If the foreign investor has transferred investment capital into Viet Nam to meet the lawful expenses of the pre-investment phase in Viet Nam, but the IC is not issued or the FDI project is not continued in Viet Nam, the foreign investor is permitted to remit overseas the investment capital transferred into Viet Nam, plus any indefinite-term interest after deducting costs relating to pre-investment activities in Viet Nam;

(2) The foreign investor is permitted to purchase foreign currency and remit overseas the investment capital converted into VND but not fully spent in Viet Nam. Remittance overseas must be conducted within 30 business days after purchase of foreign currency.

4. Remittance overseas of the remaining investment capital as above must be conducted via the same foreign currency payment account of the foreign investor opened at the authorised bank that was used to transfer the investment capital into Viet Nam.

The Circular takes effect on 25 September 2014 and replaces Article 9 of SBV Circular 05/2014/TT-NHNN (12 March 2014).— MAI COUNSEL